Russia may introduce criminal penalty for pharma price hikes

Following an investigation by the Russian Federal Antimonopoly Service (FAS) into prices of pharmaceutical products, the government may institute a criminal penalty for unfounded price increases.

President Vladimir Putin has instructed the FAS to conduct an investigation of the prices of domestic drugs and comparing them to similar drugs available in the world market. Putin has requested continued monitoring of drug prices in the Russian domestic market, as well as their compliance with current market realities.

President Putin noted that in recent years drug prices in Russia have increased dramatically, due to unfair pricing by Russian manufacturers as well as foreign entities operating in the Russian pharmaceutical market.

The FAS has been instructed to work with the Ministries of Health, Industry and Trade to create proposals to monitor and manage the domestic pharmaceutical industry in Russia. These recommendations will form the basis for potential changes to the government’s pharmaceutical management policies which could include the introduction of a criminal penalty for increases in drug pricing that are considered groundless. The FAS has been tasked with verifying the validity of expenses incurred by Russian manufacturers as related to sourcing of raw materials and components.

The latest report of the Russian Federal Statistics Service (Rosstat) found that sales of Russian-made drugs increased by more than 40% in the first half of 2016, compared to 2015. This, however, may be due to the current financial crisis in Russia many consumers have switched to domestic products which, while prices have increased year-over-year, are still less expensive than foreign imports.

This follows the news that Natsimbio, the Russian national immune biology company has been tapped by the government to become the sole supplier of blood plasma and other drugs to the Russian government. This decision could represent a significant loss of revenue for current suppliers GlaxoSmithKline and Pfizer. Russia also announced a partnership between Petrovax Pharm, a leading Russian pharmaceutical innovation corporation and Iranian Arvin Biopharma LTD to produce influenza vaccines in Iran. The Iranian government is expected to contribute financially to this $20 million project.